AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
1990 (3) TMI 379
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....he other two issues relate to the disallowance of car maintenance expenses and the guarantee commission paid to bank, for issuing guarantee to its contractees. Shri S.K. Mehta, the counsel of the assessee, submitted that, the assessee is a firm carrying on the activity of construction of buildings and that, in respect of its building construction activity, had lodged its claim u/s. 80-I before the ITO, but was denied the deduction on the reasoning that, construction activity could not be treated as an industrial activity. In appeal before the CIT(A), the assessee had laid emphasis on the words used in section 80-I, viz., manufacture or production of any article or thing and that building is very much an "article" or "thing", as it undergoes....
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.... crushing stones, etc., in the construction of buildings, as the term "engaged in an industrial activity" indicates the predominant activity and not one of the many activities, viz., construction activity. He then drew our attention to the decision of the Bombay High Court in CIT v. Pressure Piling Co. (I) (P.) Ltd. [1980] 126 ITR 333, in which case the nature of activity, viz., pressure piling operations for laying foundations for the construction of buildings carried on by that company was examined and it was observed that, the technique involved considerable specialisation, processes of concrete mixture being subjected to pressure along with iron bars at site, all indicated manufacturing operations, and a new and an independent product "....
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....at, construction concerns had not been specifically considered to be eligible for claiming relief under sec. 80-I and if it were so intended the Legislature would have specifically provided for their inclusion. We have given our very careful consideration to the rival submissions and also to the decisions referred to above. The crux of the issue is whether the term "article or thing" as referred to in sec. 80-I could be said to include a building? 3.1 Section 80-I states that, an assessee whose gross total income includes any profits and gains derived from an industrial undertaking, to which this section applies, then in accordance with and subject to the provisions of this section, would be allowed in computing his total income, deducti....
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....s to construct, to bring into being, to convert or turn, to bring into any state or condition; the word "produce" as to bring into being, to make, to bring about and the word "production" as the act of producing, that which is produced, product, bringing out, creation of values. Substituting the meaning of the various term for the terms in the phrase used in the sub- section, it would read "make either by hand or by use of machinery or partly by hand and partly by the use of machinery, construct, bring into being, convert or turn, bring into any state or condition, produce, bring out, create of value, a particular object or an item or an inanimate object, which object, item, article, produce is not listed in the Eleventh Schedule. The ar....
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....r production of such article or thing, would not be allowed the benefit of rebate from out of its business income. Therefore, for being eligible for the rebate under this section, the requirement is that, the manufactured or produced item, must be capable of being treated as an article or thing and the same should not be listed in the Eleventh Schedule. Since building is not included in the list specified in the Eleventh Schedule, we are of the view that, the construction of a building could be said to be manufacture or production of an article or thing and the claim of the assessee accordingly is justified. 3.2 The argument of the assessee that, the Finance Act, 1983, has included in the definition of industrial company", execution of p....